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IN RE:
Harvard Pilgrim Health Care, Inc.

and

ValueOptions, Inc.

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CONSENT AGREEMENT
Docket No. INS 05-204

THIS CONSENT AGREEMENT is entered into by and among Harvard Pilgrim Health Care, Inc. (“HPHC”), ValueOptions, Inc. (“VOI”), the Superintendent of the Maine Bu-reau of Insurance (the “Superintendent”), and the Office of the Attorney General. Its purpose is to resolve, without resort to an adjudicatory proceeding, violations of the Maine Insurance Code, 24-A M.R.S.A. Chapters 18, 27, and 47.

I

FACTS

  1. The Superintendent is the official charged with administering and enforcing Maine’s insurance laws and regulations.
  2. Organized and incorporated under the laws of the Commonwealth of Massachu-setts, HPHC is licensed in the State of Maine as a foreign health maintenance or-ganization under license #HMF39507, first issued in May 1994.
  3. Organized and incorporated under the laws of the Commonwealth of Virginia, VOI is licensed in the State of Maine as a foreign third party administrator under license TAF87989, first issued in August 2002.
  4. On June 5, 2000 HPHC entered into an agreement with VOI and Massachusetts Behavioral Health Partnership (the “Contract”), in which VOI agreed to adminis-ter behavioral health benefits on behalf of HPHC and to pay claims submitted in connection with such benefits.
  5. Maine Bureau of Insurance (the “Bureau”) staff performed a targeted market con-duct examination concerning the prompt payment of claims at HPHC from April 1, 2002 through June 30, 2002 for compliance with 24-A M.R.S.A. § 2436 (1), (2) and (3) and the documentation standards outlined in 24-A M.R.S.A. § 1906, 24-A M.R.S.A. § 3408 and Maine Bureau of Insurance Rule Ch. 191(10)(B). The find-ings of this examination are reported in a report entitled “Market Conduct Exami-nation Harvard Pilgrim Health Care Inc. Examination Period: 4/01/02 thru 6/30/02” (the “Report”), which is incorporated into and made a part of this Agreement.
  6. During the course of this examination, BOI staff found that HPHC and VOI treated multiple services submitted on the same claim form/service date as one claim. This procedure resulted in claims with disputed and undisputed claim lines being treated as disputed claims. After HPHC and VOI received additional in-formation needed to resolve the disputed claim line(s), they finalized the claim. This practice sometimes resulted in undisputed lines being delayed more than 30 days before payment and penalty interest was paid. The effect of HPHC and VOI’s standard procedure was to not make penalty interest payments for the un-disputed portion of a claim.
  7. In their examination of HPHC’s administration of its behavioral health benefits, BOI staff found that HPHC did not adequately meet industry standards for ensur-ing, through VOI, its third party administrator, adequate documentation of claims files or Maine Insurance Code requirements for timely claim and interest pay-ment. Specifically, VOI had failure rates of 64 % in documentation and 24 % in timely interest payment, both of which rates are in excess of NAIC Handbook standards.
  8. In their examination of VOI’s administration of HPHC’s behavioral health bene-fits, BOI staff found that VOI did not adequately meet industry standards for ade-quate documentation of claims files or Maine Insurance Code requirements for timely claim and interest payment as specified in paragraph 7.

    II

    NAIC MARKET CONDUCT EXAMINATION STANDARDS

  9. Standard L-3 of the NAIC Handbook provides that:

    Claims are settled in a timely manner as required by statutes, rules and regulations.

  10. Standard L-4 of the NAIC Handbook provides that:

    The company responds to claim correspondence in a timely manner.

  11. Standard L-5 of the NAIC Handbook provides that:

    Claim files are adequately documented.

    III

    MAINE LAW

  12. 24-A M.R.S.A. § 1906(3) provides in part that:

    An administrator shall maintain, in its principal office for the duration of the written agreement with any plan sponsor or insurer and for 7 years after the agreement expires, adequate books and records of all transactions involving a plan sponsor, health care service plan, health maintenance organization or insurer and covered individuals and beneficiaries.

  13. 24-A M.R.S.A. § 2436(1) provides in part that:

    A claim for payment of benefits under a policy or certificate of insurance deliv-ered or issued for delivery in this State is payable within 30 days after proof of loss is received by the insurer and ascertainment of the loss is made either by written agreement between the insurer and the insured or beneficiary or by filing with the insured or beneficiary of an award by arbitrators as provided for in the policy. For purposes of this section, “insured or beneficiary” includes a person to whom benefits have been assigned. A claim that is neither disputed nor paid within 30 days is overdue. If, during the 30 days, the insurer, in writing, notifies the insured or beneficiary that reasonable additional information is required, the undisputed claim is not overdue until 30 days following receipt by the insurer of the additional required information . . .

  14. 24-A M.R.S.A. § 2436(2) provides in part that:

    An insurer may dispute a claim by furnishing to the insured or beneficiary, or a representative of the insured or beneficiary, a written statement that the claim is disputed with a statement of the grounds upon which it is disputed. The statement must be based upon a reasonable investigation of the claim and must include suf-ficient detail to permit the insured or beneficiary to understand and respond to the insurer's position.

  15. 24-A M.R.S.A. § 2436(3) provides in part that:

    If an insurer fails to pay an undisputed claim or any undisputed part of the claim when due, the amount of the overdue claim or part of the claim bears interest at the rate of 1 1/2% per month after the due date.

  16. 24-A M.R.S.A. § 3408 provides in part that:

    Every domestic insurer shall have and maintain its principal place of business and home office in this State, and shall keep therein accurate and complete ac-counts and records of its assets, transactions and affairs in accordance with the usual and accepted principles and practices of insurance accounting and record keeping as applicable to the kinds of insurance transacted by the insurer.

  17. Bureau of Insurance Rule 191(10)(B) provides that:

    HMOs shall retain records of their affairs and transactions for a period of at least 6 years, and shall require any person or entity under contract with the HMO, either directly or indirectly, to retain records of their affairs and transactions relating to the HMO, for a period of at least 6 years.

    IV

    CONCLUSIONS OF LAW

  18. VOI violated 24-A M.R.S.A. Chapter 27. In particular, VOI failed to document claims adequately as required by 24-A M.R.S.A. § 2436(2).
  19. HPHC and VOI violated 24-A M.R.S.A. Chapter 27. In particular, HPHC and VOI failed to pay claims timely as required by 24-A M.R.S.A. § 2436(1).
  20. HPHC and VOI violated 24-A M.R.S.A. Chapter 27. In particular, HPHC and VOI failed to pay interest on late paid claims as required by 24-A M.R.S.A. § 2436(3).
  21. HPHC violated 24-A M.R.S.A. Chapter 47 and VOI violated 24-A M.R.S.A. Chapters 18 and 47. In particular, VOI failed to maintain adequate books and re-cords of transactions as required by 24-A M.R.S.A. § 1906(3) and § 3408 and Bu-reau of Insurance Rule 191(10)(B) and HPHC failed to ensure complete compli-ance by VOI with such requirements.

    V

    COVENANTS

  22. Within forty-five (45) days of executing this Agreement, VOI shall, for the period starting June 5, 2000 and ending as of the date of this Agreement, (i) identify all claims for Covered Services, any part of which VOI did not pay timely to a Mem-ber or Provider and (ii) calculate and pay outstanding interest to the appropriate Member or Provider. Within forty-five (45) days of executing this Agreement, VOI shall submit to the Superintendent a report of all claims so identified, the in-terest paid, the payee and the method used to identify such claims and to calculate the interest owed. HPHC and VOI specifically affirm that the wording of this paragraph reflects VOI’s subcontractor relationship with HPHC under the Con-tract, and HPHC further affirms that it remains responsible under the Maine In-surance Code and this Agreement for VOI’s actions as HPHC’s subcontractor.
  23. Within thirty (30) days of executing this Agreement, HPHC and VOI shall adopt, and submit to the Superintendent for approval, written procedures for ensuring that all claims for Covered Services are paid in compliance with Maine law, in-cluding payment of interest where required. Such procedures will specifically re-solve the issue of claims that include disputed and undisputed lines.
  24. HPHC shall pay a civil penalty of Five Thousand Seven Hundred Dollars and No Cents ($5,700.00) for violating 24-A M.R.S.A. § 2436, as described in paragraph 7.
  25. HPHC shall pay a civil penalty of Five Thousand Seven Hundred Dollars and No Cents ($5,700.00) for violating 24-A M.R.S.A. § 3408, as described in paragraph 7.
  26. VOI shall pay a civil penalty of Ten Thousand Dollars and No Cents ($10,000.00) for violating 24-A M.R.S.A. § 2436, as described in paragraph 8.
  27. VOI shall pay a civil penalty of Five Thousand Dollars and No Cents ($5,000.00) for violating 24-A M.R.S.A. § 1906, as described in paragraph 8.

    VI

    MISCELLANEOUS

  28. Capitalized terms used but not defined in this Agreement shall have their respec-tive meanings as defined in the Contract.
  29. A formal hearing in this matter is waived and no appeal will be made.
  30. HPHC and VOI acknowledge that this Consent Agreement is a public record within the meaning of 1 M.R.S.A. § 402 and will be available for public inspec-tion and copying as provided for by 1 M.R.S.A. § 408, and will be reported to the NAIC RIRS database.
  31. HPHC and VOI have been advised of their respective right to consult with coun-sel and have, in fact, consulted with counsel before executing this Agreement.
  32. Nothing herein shall affect any right or interest of any person or entity not a party to this Agreement.
  33. Nothing herein shall prohibit the Superintendent from seeking an order to enforce this Agreement, or from seeking additional sanctions if either HPHC or VOI does not comply with the above terms, or from taking further legal action if the Super-intendent receives additional evidence that further legal action is necessary, which evidence is related to those matters which are within the scope of the Report and the subject of this Agreement, and which was not previously a part of this investi-gation.
  34. This Agreement may only be modified by the written mutual consent of all par-ties.

 

Dated: ________, 2005

HARVARD PILGRIM HEALTH CARE, INC.

By: ___________________________________

Its: ___________________________________
      Printed Name and Title

Subscribed and sworn to before me
this _______ day of ________, 2005.

____________________________
Notary Public

____________________________
Printed name

____________________________
Date commission expires

Dated: ________, 2005

VALUEOPTIONS, INC.

 

By: ___________________________________

Its: ___________________________________
      Printed Name and Title

Subscribed and sworn to before me
this _______ day of ________, 2005.

____________________________
Notary Public

____________________________
Printed name

____________________________
Date commission expires

 

Dated: ________, 2005

MAINE OFFICE OF THE ATTORNEY GENERAL

______________________________
Thomas C. Sturtevant, Jr.
Assistant Attorney General


Effective
Date: ________, 2005

MAINE BUREAU OF INSURANCE

 

___________________________
Alessandro A. Iuppa
Superintendent

 


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Last Updated: October 22, 2013